How to calculate fair value of debt in Haliburton?



0
i found below para in 10K of HAL. what is fair value of debt?

The fair value of our long-term debt was $6.2 billion as of December 31, 2011 and $4.6 billion as of December 31, 2010, which differs from the carrying amount of $4.8 billion as of December 31, 2011 and $3.8 billion as of December 31, 2010, on our consolidated balance sheets. As of December 31, 2011, $3.6 billion of the fair value of our long-term debt and as of December 31, 2010, $4.2 billion of the fair value of our long-term debt were calculated using quoted prices in active markets for identical liabilities. As of December 31, 2011, $2.6 billion of the fair value of our long-term debt and as of December 31, 2010, $422 million of the fair value of our long-term debt were calculated using significant observable inputs for similar liabilities.

1 Answer(s)


0

Just like there is a stock market for stock trading, there is also a debt market were corporate debt is traded. Fair value is the market value of the debt.

For example if a company has taken $1bn worth of debt, its market/fair value could be higher or lower based on how healthy/unhealthy the company is and its chances of repaying/defaulting.

Your Answer

Click on this code-snippet-icon icon to add code snippet.

Upload Files (Maximum image file size - 1.5 MB, other file size - 10 MB, total size - not more than 50 MB)

Email
Password